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Chinese Auto Industry Expedites Merging and Reorganization
The beginning of the new century sees a breakthrough in the merging and reorganization of the Chinese auto industry.
The Wuling Motors Co., the Shanghai Automotive Industry Corporation (Group) and the General Motor of the United States have, as reported, entered into the last stage of negotiation for a tripartite alliance and a formal agreement is expected to be sealed soon by the three parties. Therefore, a new giant in Chinese auto industry will come into existence to possibly instigate a change in the traditional pattern of the industry.
Later, the Chery Auto Co., Ltd. of Anhui Province followed up. It is incorporated into the Shanghai Automotive Industry Corporation (Group) through the transfer of assets and equities.
Also reported is a combination of the section for medium-sized vehicles of the First Automobile Works and the Dongfeng Motor Co. which is now still being incubated.
As analysis has it that the merging and reorganization is undoubtedly resulted from the re-distribution of resources under the impact of market mechanism. It is of great importance for the Chinese auto industry to reduce unregulated competition and form a mutually benefited alliance for the technical development, distribution of products and supply of accessory parts.
According to authorities concerned, the union of the said auto companies shows that the Chinese motor industry has already realized the importance of agglomeration in resisting foreign TNCs in an environment rapt with rigorous competition when China is already at the gate of the WTO.
By PD Online staff member Deng Gang
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